The Supreme Administrative Court of Sweden has ruled on December 11, 2017 that when a building is bought on land with long lease, all the acquisition value shall be referred to the building (Supreme Administrative Court, case no. 3148-16). Text in Swedish follows further below.

The Swedish Tax Agency wanted to refer part of the acquisition value to land, for which depreciation can’t be done, but they lost their case. As all the acquisition value is to be referred to the building, depreciation is also calculated for on the total value.

The ruling of The Supreme Administrative Court is completely in accordance with my description of how to treat acquisitions of buildings on land with long lease in my Swedish book Real Estates – Accounting and Taxation. There I referred to an older case from The Supreme Administrative Court ruled 1976 (case no. RRK R76 1:6) and a fresher case from The Court of Appeal of Stockholm, the last level before The Supreme Administrative Court, 2016 (case no. 5657-15).

Turns out the December ruling by the Supreme Administrative Court applied to an appeal by The Swedish Tax Authority of the ruling in The Court of Appeal from 2016. Frankly I’m surprised that The Swedish Tax Authority even tried. To me it seemed pretty obvious already before. But now the matter is settled once and for all!

So, the content in my book Real Estates, section 2.1.9 Land with Long Lease (page 47) is accurate, as well as all the other parts of the book which refers to my description of how to treat acquisitions of buildings on land with long lease. The same goes for my lectures. That’s good!